Pharmaceutical companies continually grapple with ways to make drug development more cost- and time-effective. The shared goal among companies is to identify and allocate resources to the most promising drug candidates, a process that to be effective, has to begin in early-stage development. Increasingly, the large pharmaceutical companies are seeking to create more flexible R&D organizations tied to more stringent requirements for return on investment (ROI) as a way to foster greater R&D productivity. As the strategies of pharmaceutical companies evolve, including a greater reliance of external partnerships, so do the strategies of contract service providers and other partners to meet this changing paradigm.

Crunching the numbers

The necessity for pharmaceutical companies to evolve their R&D models and improve R&D productivity is evident by the cost and time of drug development. It takes on average 10–15 years to bring a new drug to market at an estimated cost of $1.2 billion, according to data from the Pharmaceutical Research and Manufacturers of America (PhRMA). Only two of 10 marketed drugs return revenues that match or exceed R&D costs, notes the PhRMA data. Although the number of compounds in development has increased significantly during the past decade, the number of approvals of new molecular entities (NMEs) has not increased commensurately. In 2011, there were 3240 compounds in development, a 58.8% increase compared with 2040 compounds in development in 2001, according to PhRMA. In four of the past seven years (2005–2011), fewer than 30 NMEs have launched, according to the IMS Institute for Healthcare Informatics. According to the KMR Group, based on industry success rates from 2006–2010, approximately 95% of the compounds that entered Phase I development failed to achieve regulatory approval. The failure rate for compounds that entered Phase II development was approximately 90%, and for compounds that enter Phase III development, it was approximately 54%. In 2011, research-based pharmaceutical companies (defined as members of PhRMA) collectively spent $49.5 billion on R&D, down slightly from the $50.7 billion spent in 2010.

New R&D models at Big Pharma

Pfizer. Facing a need to improve success rates, Pfizer, like other large pharmaceutical companies, is redirecting its R&D strategy. "...We have sharpened the focus on certain key areas, emphasized strategic externalization, which includes select CRO partners as alliances for the future, additional biotech acquisitions and collaborations, and [are] also building a real strong network with academia," said Mikael Dolsten, president of Worldwide Research & Development at Pfizer at a UBS Global Life Sciences Conference on Sept. 20, 2012.

Part of that focus includes earlier integration of science and finance into R&D decisions, which for Pfizer has resulted in the termination of approximately 90 projects in the pre-proof-of-concept phase, according to Dolsten in his recent presentation. Overall, Pfizer spent $9.1 billion on R&D in 2011, slightly down from $9.4 billion in 2010, according to company information. As of year-end 2011, Pfizer had 262 projects in R&D ranging from discovery through registration, of which 95 programs were in Phase I through registration (including 22 programs in Phase III), with the remainder of the projects in preclinical development. Its research primarily focuses on five high priority areas with a mix of small and large molecules: immunology and inflammation; oncology; cardiovascular, metabolic and endocrine diseases; neuroscience and pain; and vaccines. In addition to reducing the number of disease areas of focus, Pfizer is realigning and reducing its R&D footprint and outsourcing certain functions. On the CRO side, Pfizer has transitioned from 17 functional service providers to two strategic partners for clinical trials, ICON and Parexel.

Pfizer also is stressing partnerships with academia as part of its R&D model. Beginning in 2010, Pfizer established several Centers for Therapeutic Innovation (CTI) as a new entrepreneurial research unit for fostering global partnerships with academic medical centers (AMCs). The CTI is an open-innovation partnering model to facilitate early science and translation into clinical applications for biotherapeutic modalities (antibodies, peptides, and proteins) across all therapeutic areas. CTI laboratory staff include Pfizer employees working with basic and translational science investigators and post-docs from the AMCs. CTI has established partnerships with 21 AMCs in the US and supports collaborative projects from four dedicated laboratories in Boston, New York City, San Francisco, and San Diego. Pfizer also has established disease-focused research units in Cambridge, Massachusetts, and Cambridge, United Kingdom as part of a restructuring of its R&D sites following its acquisition of Wyeth in 2009.